Mixed reactions have continued to trail President Muhammadu Buhari’s first year in office. Whereas some insurance operators have commended his regime’s recognition of the industry’s potential, others have condemned his government over what they described as regulatory high handedness. Ebere Nwoji reports
The insurance industry, is one of the sectors of the economy that has placed high hopes on the ability of the present administration led by Muhammadu Buhari to bring a major turn around in its fortunes especially in its current effort to contribute significantly to the nation’s economic growth.
Indeed, the industry operators,are optimistic that many things left undone by the past administrations in the effort to reposition the insurance industry as alternative contributor to the nation’s economic growth in the presence of continued decline in the price of oil, will be accomplished by the Buhari’s administration.
As the regime clocks one year in office, industry operators and stake holders have paused to count their gains from the administration.
In accessing the performance of the industry during this one year period, operators said it has been a mixture of bitterness and sweetness in their business experience.
According to them,sweetness,in the sense that the administration recognises the sector as part of financial services sector that has the ability to contribute meaningfully to the current struggle for turn around in the economy.
In this regard, the operators noted that the present administration has accorded high recognition to the industry in that it has shown interest in driving insurance to the fore front of the financial services sector in Nigeria.
Bitterness, in the sense that many operators both brokers and underwriters groan under what they described as high handedness of regulators supervising their operations as well as major shrink in premium generation as a result of tough times experienced by Nigerians within the one year period of the regime.
They regretted that a lot of premiums are lost in transit due to non enforcement of compulsory insurances by government while late implementation of first annual budget packaged by the administration had placed both corporate and individual citizens of the country in such tight financial position that they hardly consider insurance patronage.
On the positive side, the immediate past commissioner for insurance, Mr Fola Daniel had in the early days of Buhari’s administration, noted that the regime is very sensitive to the fact that insurance is key to building a virile economy and had for the first time in the history of the country,called for the contributions of the industry to its transition committee.
Describing this as first in history for the industry from the federal government,Daniel said the future holds a lot for the insurance industry under Buhari’s administration,
A critical assessment of the industry’s performance during this one year period reveals that the industry has within the period shown signs of market discipline which stake holders have been yearning for among operators in their business conduct.
For instance, within this period, some insurance companies have been sanctioned ,boards of directors have been replaced with interim managers while warning memos have been issued to some firms .
Also, a critical screening of operators in their various trade groups was conducted especially insurance brokers where the regulator has vowed to seperate the wheat from the shaft .
For instance, in December last year, NAICOM had published names of 108 insurance brokers operating without genuine licences.
This year,it has published names of 300 brokers who are certified fit for operation.
Though this has caused uproar in the industry, Kari said it is for the over all good of the industry.
Also Within the period, NAICOM had vowed to implement to the last the recommendations and guidelines stipulated by the world bank on supervision of insurance institutions.
The commission had within this one year period,commenced the full implement of the Risk Based Supervision model.
Before the implementation of the model, the commission had informed the operators that in exercise of the powers conferred on it by section 49 of the insurance act of 1997,it has released what it termed Market Conduct and Business Practice Guidelines for all insurance institutions in Nigeria.
The commission, also released another document tagged Prudential Guidelines for Insurers and Reinsurers in Nigeria.
Brandishing to the insurers the 78 page market conduct and Business guidelines for insurers at a forum in Abuja, Deputy Commissioner for Insurance, Finance and Admin Mr George Onakhene said the document contains frame work for fair policies and procedures,effective claims management, trade practices and fair treatment of customers.
According to him,it also contains operations, pricing , commissions and associated returns as well as foreign facultative reinsurance placements for reinsurance brokers.
The 62 page prudential guidelines for insurers and reinsurers the deputy commissioner said sets out the minimum prudential standards for underwriting reinsurance,investments, reserving , outsourcing among other activities required from insurance institutions with a frame work for the establishment of policies and procedures for internal controls.
Onakhene urged the insurers to endeavor to put their house in order to survive in the face of the guidelines.
Also within the period, there have been signs of implementation of professionalism and values among operators by the regulator.
There have been crusades on this by the past administrations in the commission, but this
time, there appear to be pronounced zeal for practical implementation of professionalism and sound ethical conduct by the regulator.
The commissioner for insurance, Alhaji Mohammed Kari, had within the period under review, called for what he described as professional re-awakening and embracing of professionalism and core values among insurance industry practitioners in order to correct wrong perception on insurance by Nigerians.
According to him, the re-awakening effort among insurers has become necessary to ensure that only trained personnel are allowed to practice insurance in Nigeria.
” You will agree with me that insurance services are being rendered by
persons and bodies without adequate training, we must embrace professionalism
as core value in our industry insisting that to achieve this, the industry must train all persons that carry its flag to consumers.
“Insurance practitioners and professionals should be seen to uphold the tenets of the profession both in their words and actions. It is not enough for the Institute to breed and certify insurance professionals only, but must also ensure that they are regularly updated through training and retraining to enable them measure up with current global trends,” he insisted.
Also within the period, the operators in their various trade groups had witnessed a lot of screening, sanctions and threats of license withdrawals, to the extent that some have raised allegations of unnecessary witch hunting and vindictiveness against the regulator.
The most painful to them was the recent release of names of 300 insurance brokers by the regulator as those fit for operation in the market. The brokers under the aegis of Nigerian Council of Registered Insurance Brokers(NCRIB) argued that by releasing the list to the public without note that screening is still going and that more brokers would be certified fit for operation in due course, the regulator had created wrong impression that no operator outside the 300 brokers released is fits for operation.They lamented that this had posed a big threat to their businesses and had reduced clients’ confidence on them.
But Kari, during his recent visit to corporate head face of THISDAY in Lagos had forewarned that publishing of list of 108 Insurance brokers done by his office in December last year was just the beginning and that more were coming until he had fished out all the bad eggs in the industry.
“Recently, precisely towards the end of last year, we did a review of licenced operators especially intermediaries and your paper was among those that published the list. 108 insurance brokers with lapsed licences. And that caused an uproar, not from consumers but from those class of intermediaries, who feel that we have deprieved them of their means of livelihood. They argued that we have caused unemployment; they argued that we are unjust, but the interest of the public we protect is more important than their complaints. Because we found out that all those companies that we published, we did not cancel any licence. They are operating without genuine licence from us so we only alerted the public not to do business with them because they don’t have genuine licence. And that caused a panic but since then, if you see the level of attempt to comply with appropriate licensing procedure, you will be surprised.
“But that is not the issue, we are checking our records to identify more that will go out of practice because it is those rotten ones that cause problem and create the bad publicity and bad name for the industry and there will be more to be published no matter their level of complaints. All those complaining,when they do in their own name and they have specific cases we look at them , if they have merit, we listen to them but most of them don’t operate with their names.
They operate with silly names because they know they have no legal licence”.They will rather stop defrauding people,” Kari stated.
Still in the same sanitisation effort, NAICOM said effect from June this year, it will ensure that all insurance policies issued in Nigeria is assigned identification numbers.The commission said this will be made possible through the use of its much awaited portal system which will be in use from June.
the portal system, is an electronic gadget designed for effective supervision and monitoring of the industry operators’ activities.
Director, Research Strategy and InformationTechnology, of NAICOM Adamu Balanti, said with the portal system, the commission,will not only achieve effective monitoring and supervision of the operating firms’ activities, but would showcase to Nigerians every insurance policy written and the names of companies that insured them.
Ballanti said currently, the commission, is sensitising the industry on the use of the portal.
“Before June, we will roll out the portal and when operational, it will capture every single insurance policy issued in Nigeria to ensure that every policy you pick has identification number to be issued by NAICOM”, he said.
It is expected that the unique policy identification system of the commission will solve poroblem of identifying the particular insurance firm that insured a particular business especially when there is risk and need for payment of claims.
These efforts are no doubt made to reposition the industry during the current regime.
But in spite of these, the operators said there are a lot of expectations yet to be realised from the administration.
According to the operators,they are yet to realise their dream of having all airline operators insure every aircraft that flies in Nigeria , although recently in a chat with THISDAY in his office, the Public Relations Manager of the Nigerian Civilian Aviation Authority (NCAA) Mr Fan Ndubuoke had said that all Aircrafts that fly in Nigeria have insurance cover, the insurers observed that some airline operators hardly buy insurance for their aircrafts and some where they buy, prefer to patronise foreign insurers rather than indigenous insurers there by going against the local content law of the federal government.
Against this backdrop, the operators have appealed to the Buhari’s administration to cover up the gap.
Making the appeal, immediate past president Nigerian Council of Registered Insurance brokers Mr Ayodapo Shoderu urged the administration to ensure that henceforth, no airline operates without adequate insurance cover especially from a registered indigenous insurer.
“They should also ensure that no airline operator is allowed to operate without adequate insurance cover. Adequate insurance will guarantee, that in case of any unfortunate incident, the bereaved families will have something to fall back on. On our part as insurance brokers, we have taken our awareness campaign to the Airline Operators of Nigeria (AON). We have had meeting with the representative of the Association and a further meeting is to be rescheduled for a later date, not only with AON, but also other professional bodies in the aviation industry, to ensure that the mechanism of risk taking provided by law is strictly adhered, to avoid double tragedy for the families of victims,” Shoderu stated.
He however called on government to also throw its federal might behind the entrenchment of insurance policies not only in aviation industry but all other sectors especially in the area of enforcing compulsory insurances.
“There are almost six compulsory insurance policies that have been highlighted by our regulator; we need government support and backing to enforce them. It is of common knowledge that incumbent administration will not tolerate corruption of any sort, I like to say that avoidance of compulsory insurances is high level of corruption, therefore, it must be included in the ongoing fight against corruption,” Shoderu said.
It is on record that five years after the launch of the various compulsory insurances in the country, enforcement has remained a major problem. Against this backdrop the operators had hoped that the present administration would see to enforcement of the compulsory insurances but this has not come to be as the compulsory insurances are still not enforced.
The operates said they are ye to see change in government recognition of insurance especially with regard to insurance of its properties.
Over the years, the insurers had accused government of paying lip service to the industry grumbling that insurance is the only sector that government hardly patronises.
Mr Tope Smart,Managing Director Nem Insurance plc speaking in this regard complained that up to the present time,government does not believe in insurance and does not contribute to its development. He said as a result,the Nigerian insurance industry has continued to suffer stunted growth. He also pointed out non enforcement of compulsory insurances as opportunity which government denied the industry.
“If you look at what obtains in other parts of the world where there are compulsory insurances and government creates an enabling environment where it ensures that people comply,they enforce the laws. In Nigeria, enforcement is the problem and without enforcement, premiums are lost to fake insurance. Don’t be surprised that a lot of people still carry fake insurance certificate of non-existing companies like Lion of Africa, victory, ACEN, vigilant insurance, etc. and it is because there is no enforcement and nobody bothers to look at that area.
So you will discover that a lot of money is being lost and until government comes in to actually enforce these laws, we will continue to lose money. For instance, look at the area of group life, government has tried to an extent by saying that you must have your group life certificate to do a lot of things as a company. They are enforcing it through PenCom. If government can do this in the area of motor insurance, building under erection and other products, it is going to bring a lot of income for the industry and the Nigerian economy”, he stated.
The operators also said the present administration should ensure timely implementation of Annal budget adding that it stimulates the performance of the economy and that of insurance in particular.
president of Nigerian Council of Registered Insurance Brokers(NCRIB),Mr Kayode Okunoren, recently urged federal government to commence the implementation of the year’s budget with out further delay.
Okunoren, who made the call at the April edition of the Members’ Evening of the council,held in Lagos,noted that it is disheartening that up till now, at the expiration of the fifth month of the year, government has not started the implementation of the budget.
He said implementation of the budget, would provide succor to the current obvious sufferings of Nigerians.
“Similarly, the appeal has to go to government to immediately commence the implementation of the 2016 National Budget which would definitely succor Nigerians. It is disheartening that up till now, at the expiration of the fourth month of the year, government has not started the implementation of the budget”, he stated.
In overall, the operators said what they have experienced within this one year period of Buhari’s administration is signs of good days ahead for the industry and have expressed hope that the future will be better for the industry but they said regulators should shun unnecessary victimisation and conduct their activities in a manner that will enhance the industry’s growth.